Correlation Between MGO Global and CMG Holdings

Can any of the company-specific risk be diversified away by investing in both MGO Global and CMG Holdings at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining MGO Global and CMG Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MGO Global Common and CMG Holdings Group, you can compare the effects of market volatilities on MGO Global and CMG Holdings and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in MGO Global with a short position of CMG Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGO Global and CMG Holdings.

Diversification Opportunities for MGO Global and CMG Holdings

0.05

Correlation Coefficient

MGO Global  CMG Holdings

Significant diversification

The 3 months correlation between MGO and CMG is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding MGO Global Common and CMG Holdings Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMG Holdings Group and MGO Global is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on MGO Global Common are associated (or correlated) with CMG Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMG Holdings Group has no effect on the direction of MGO Global i.e., MGO Global and CMG Holdings go up and down completely randomly.

Pair Corralation between MGO Global and CMG Holdings

Given the investment horizon of 90 days MGO Global Common is expected to generate 11.51 times more return on investment than CMG Holdings. However, MGO Global is 11.51 times more volatile than CMG Holdings Group. It trades about 0.13 of its potential returns per unit of risk. CMG Holdings Group is currently generating about 0.05 per unit of risk. If you would invest  236.00  in MGO Global Common on December 1, 2024 and sell it today you would earn a total of  359.00  from holding MGO Global Common or generate 152.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	90.16%
Values	Daily Returns

MGO Global Common  vs.  CMG Holdings Group

MGO Global Common

Risk-Adjusted Performance

OK

Over the last 90 days MGO Global Common has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite uncertain basic indicators, MGO Global disclosed solid returns over the last few months and may actually be approaching a breakup point.

CMG Holdings Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CMG Holdings Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, CMG Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MGO Global and CMG Holdings

The main advantage of trading using opposite MGO Global and CMG Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGO Global position performs unexpectedly, CMG Holdings can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in CMG Holdings will offset losses from the drop in CMG Holdings' long position.

The idea behind MGO Global Common and CMG Holdings Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Insider Screener module to find insiders across different sectors to evaluate their impact on performance.